🔅 What happened to 'Africa Rising'? Africa’s Misplaced 2020 Expectations
Plus: The rich get richer, half of all South Africans depend on state welfare, Zimbabwe health workers are threatened with jail time, and much more … ☕
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Global Markets: Luxury Car Sales Break Records | Luxury car brands like Rolls-Royce, Bentley, and Lamborghini had record sales again last year, with Rolls-Royce topping 6,000 vehicles sold for the first time in its 118-year history. SUVs were a significant part of the success of these brands, with the Lamborghini Urus, Bentley Bentayga, and Rolls-Royce Cullinan accounting for over half of sales. People aren’t just buying more cars, but more expensive and highly customized versions of those cars. Rolls-Royce and Bentley customers are forking an average of $500,000 and $43,000 for their rides. And with Rolls-Royce’s first fully electric model, the Spectre, orders have already far exceeded what the company had expected.
*Data accurate as of the close of markets across the continent
ECONOMICS
Africa’s Misplaced 2020 Expectations
When the 21st century dawned, the narrative around Africa was all about “Africa Rising”. We were assured a long-term future of economic growth and rising incomes. Boy, were we wrong.
Fast forward two decades, and we’re not looking at economic growth and rising incomes but rather debt repayments that are the highest they’ve been in over 20 years. 22 African countries are debt distressed or at a high risk of it.
What caused the crisis?
Mainstream economists generally point to the fact that Africa’s long-term loans doubled in the 2010s, with countries like Nigeria seeing an extra $21.27 billion of debt accumulated in the late 2010s.
But the reason for this increase wasn’t because of Africa’s economic struggles. In fact, it was the very opposite - the continent was booming and its economies were growing, meaning countries had more capacity to take out loans to build infrastructure.
So, what changed?
Enter Covid-19. The pandemic threw everything into chaos and had a devastating knock-on effect on the continent. GDP fell by an average of 4-5%, remittances from the diaspora dropped by 14%, and small businesses were forced to close (e.g. 47.2% of small businesses in South Africa shuttered).
But the effects of the pandemic policy response don’t stop there. The collapse in economic activity led to soaring inflation. Combined with the fact that a lot of Africa’s debt is held in US dollars, and the US has become the one macroeconomic winner of the pandemic policy response, it makes it harder to keep pace with debt repayments.
Was this a surprise?
It shouldn’t have been. As early as April 2020, well into the pandemic, Emmanuel Macron called for debt crisis measures, but they failed to address underlying issues.
It’s a familiar story — the same played out during the eighties’ debt crisis, which led to similar IMF/World Bank bailout loans tied to severe austerity measures and asset-stripping.
OTHER HEADLINES
Across the Continent
🇿🇦 South Africa’s State Handouts | South Africa recently dropped some hard numbers: 29 million of South Africa’s 60 million citizens are now welfare recipients, half of whom get a R350 grant each month. That’s a lot of money to hand out, but Ramaphosa isn’t too worried. He pointed out that South Africa is the only African nation to be giving money to almost half its population and that the government has already built over 4 million houses and funded the tertiary education of close to a million students from low-income homes. But the government’s generosity doesn’t end there: they’re now considering introducing a permanent basic income grant for the jobless.
🇿🇼 Zimbabwe’s Lockdown on Health Worker Strikes | A new law has been signed by President Mnangagwa that prohibits health professionals from striking for more than three days. The government says it’s to ensure essential services are maintained, but health workers say their salaries and lack of basic equipment make their jobs unsustainable. This means that any strikes that last longer than three days will result in jail time. Other countries, including South Africa, have limits on strikes by health workers, but they don’t impose such harsh punishments.
🇲🇱 Mali’s Military in Turmoil | On Tuesday, fourteen Malian soldiers were killed and eleven more were wounded in two separate attacks. The Malian army has since reportedly killed 31 rebels in response. Al-Qaeda and ISIS have been wreaking havoc in the region, and with French troops having pulled out of Mali and Germany planning to do the same in 2024, things are looking grim. There have also been reports of Wagner Group operatives from Russia arriving to back up the government forces, adding another layer of complexity to the conflict.
😎 What else we’re looking at:
A time-lapse map of the colonization (and decolonization) of Africa.
Photos from Black Star Line: Ghana’s 50,000-strong diaspora festival
FOOD FOR THOUGHT
Proverb of the Day
“Wisdom does not come overnight.”
— Somali Proverb.
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